Chinese e-commerce company PDD Holdings, which owns shopping apps Pinduoduo and Temu, shocked analysts with its Q1 2024 financial results. Revenue increased by 131% to RMB 86.81B, adjusted net income rose by 202% to RMB 30.60, and adjusted EPS increased to RMB 20.72, all surpassing analyst expectations. The lack of communication from management led to a huge disparity between analyst models and the actual results. Despite accusations of fraud in a Financial Times article, PDD’s shares have risen significantly, outperforming the S&P 500 and Nasdaq 100.
Another Chinese company, Kuaishou Technology, announced Q1 financial results that beat analyst expectations. Revenue increased by 16.6% to RMB 29.41B, adjusted net income rose by 10,347% to RMB 4.39B, and adjusted EPS increased to RMB 0.95. The company also spent HKD 1.63B buying back shares in Q1 2024. Daily and average users increased, and cross-selling via e-commerce was successful for Kuaishou, demonstrating the company’s strong performance.
In the Asian equities market, stocks were mixed as investors awaited Nvidia’s financial results. Hong Kong-listed stocks fluctuated, with the Hang Seng Tech Index seeing a small gain. After the strong results from PDD and Kuaishou, as well as e-commerce player Vipshop, some US-listed China stocks saw a lift. Mainland China saw small gains, with solar names higher following new industry guidelines promoting M&A and addressing overcapacity and pricing issues.
Real estate was a top performer in both Mainland China and Hong Kong, with Wuhan becoming the first city to cut the down payment ratio and mortgage interest rates. The appearance of China’s unemployment data is not newsworthy, as the National Bureau of Statistics adjusted the data to exclude students as “unemployed.” The Hang Seng and Hang Seng Tech indexes closed with slight divergences, with value and small caps outperforming growth and large caps. Technology, utilities, and real estate were top-performing sectors, while materials, consumer discretionary, and energy were among the worst-performing.
In Shanghai, Shenzhen, and the STAR Board, markets saw gains, with value and small caps outperforming growth and large caps. Technology, real estate, and industrials were top-performing sectors, while consumer staples, consumer discretionary, and health care were among the worst-performing. Foreign investors bought a net $662 million worth of Mainland stocks. CNY and the Asia Dollar Index were slightly off against the US dollar, while Treasury bonds rallied. Copper fell while steel prices rose. An upcoming webinar will discuss the potential drivers of a sustained equity bull market in China, as well as the impact of the US election on US-China relations.
